Pa. taxpayers foot growing bill for natural gas subsidies

November 4, 2013

HARRISBURG, Pa. - The discovery five years ago that the Marcellus Shale, the nation's largest natural gas reservoir, could spew big profits and cheap, homegrown energy has, in turn, spurred gas-friendly state officials to run up a growing taxpayer-funded tab to encourage the use of the hydrocarbons.

Bills pending in the Republican-controlled Pennsylvania Legislature could deliver hundreds of millions of dollars in subsidies over a decade, possibly even approaching $1 billion, and that's in addition to the expanding number of checks being written by Gov. Tom Corbett.

With the assent of lawmakers, Corbett, a Republican who says the industry has the potential to reindustrialize Pennsylvania, has tapped four pots of money for more than $30 million for natural gas projects.

That includes money for a processing project by plastics maker Braskem S.A. of Brazil, pipeline construction to link facilities of French drug maker Sanofi SA, scores of compressed natural gas vehicles and about a dozen fueling stations. About a fifth of that money is drawn from a $200 million-a-year drilling fee on the industry.

On top of that, lawmakers last year approved what could become the state's biggest taxpayer-paid economic development incentive ever, possibly in excess of $1 billion over 25 years, to entice the construction of a multibillion-dollar petrochemical refinery to convert natural gas liquids into ethylene for the plastics and chemicals industries. Netherlands-based oil and gas giant Royal Dutch Shell PLC is considering it.

Patrick Henderson, a deputy chief of staff for Corbett who spearheads the administration's energy policy, couldn't say how much money the administration ultimately would be willing to spend to encourage natural gas use.

Some of the subsidies were drawn from economic development incentive money that is designed to spur hiring, and it was coincidental that natural gas was a key aspect of the project, Henderson said.